Best Short Term Investment Plans for 2017

Short Term Investments are made with an intention to earn significant returns within a short tenure of investment that may be 1 year or less. Unlike long term investments, short term investments are made to meet the financial needs at hands. It is preferred by the impatient investors who just can’t wait for years to get their money multiplied. A short term investment is characterized by some common factors:

Short investment tenure (< 1 year)

High liquidity

Keeping the principal intact

Getting an optimum return

While investing for a short term, expecting great returns would be a grave mistake. The right approach is to have realistic objectives and expect optimum returns.

Cut out the frill, get a plain savings account. It is perhaps the most simple and smart short term investment. The returns might not be substantial, but your capital value remains intact so you have nothing to lose here. Top it up with the ease of depositing and withdrawing the money; what more can you ask for. Some banks may offer high interest rates on savings account on the condition that the investor will have a substantial minimum balance in the account.

Pros

No risk

High liquidity

Cons

Low rate of returns

2). Liquid Funds

It is a variant of mutual fund in which the investment is made in those short-term market instruments which have the least volatility such as government securities and treasury bills. These money market instruments come with a maturity up to 91 days. Liquid funds are the least risky among mutual funds as there is no mark to market (MTM) involved. Easy liquidation is what gives liquid funds an edge over other types of investments.

Pros

High liquidity

No lock-in period

Cons

Low rate of returns

3). Debt Instruments

The investment made in debt instruments is intentioned at securing the capital rather than getting a return. Investing in debt instruments is preferred by investors with a low appetite for risk and a fear of market volatility. With a potential to yield up to 10.5% returns (prior to tax deduction), this form of investment is a steady way to mint some smart money within a short tenure.

Pros

No risk

Optimum rate of returns

Cons

Low liquidity

4). Gold

Gold is the evergreen best investment plan, both for short-term and long-term. The market value of gold fluctuates in a very agile manner on a day to day basis and shows a tendency to always go up. Buying gold ETFs serve the same purpose as buying physical gold. The high price is the only stumbling block in making an investment in gold.

Pros

High rate of returns

High liquidity

Cons

High investment price

5). Bank Fixed Deposits (Bank FDs)

Bank Fixed Deposits has always been a favorite among Indian investors. FDs offer the investors a higher rate of return than a savings account (almost twofold). The rate of return remains constant throughout the maturity term. The term can be anywhere between 7 days and 10 years, but most of the investors go for a 1 year tenure. The investor should avoid withdrawing the money before the maturity term as it incurs a penalty. With a potential to yield up to 10% rate of return, FD is best for investors with a low appetite for risk.

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